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THE MINISTRY OF TRADE - THE COMMISSION ON ETHNIC MINORITIES AND MOUNTAINOUS AREAS - THE MINISTRY OF FINANCE - THE MINISTRY OF PLANNING AND INVESTMENT

JOINT CIRCULAR No. 11/1998/TTLT/BTM-UBDTMN-BTC-BKHDT OF JULY 31, 1998 GUIDING THE IMPLEMENTATION OF THE GOVERNMENT'S DECREE No. 20/1998/ND-CP OF MARCH 31, 1998

Pursuant to Decree No. 20/1998/ND-CP of the Government of March 31, 1998 on trade promotion in the mountainous regions, islands and areas inhabited by ethnic minority people, the Ministry of Trade, the Commission on Ethnic Minorities and Mountainous Areas, the Ministry of Finance and the Ministry of Planning and Investment hereby jointly guide some contents on building markets and State-owned stores; price and freight subsidies; the State enterprises engaged in trade activities in mountainous regions, islands and areas inhabited by ethnic minority people; and the management of reserve capital for policy commodities as follows:

I. SCOPE AND OBJECTS OF REGULATION

1. The following geographical areas are subject to Decree No. 20/1998/ND-CP:

1.1. Mountainous regions: including highland mountainous provinces, provinces with mountainous districts and provinces with mountainous communes as defined by the Commission on Ethnic Minorities and Mountainous Areas in Decision No. 21/UB-QD of January 4, 1993, Decision No. 33/UB-QD of June 4, 1993, Decision No. 08/UB-QD of March 4, 1994, Decision No. 64/UB-QD of August 26, 1995, Decision No. 68/UB-QD of September 6, 1997 on the recognition of communes, districts and provinces as mountainous and/or highland ones.

1.2. Islands: as prescribed by the Commission on Ethnic Minorities and Mountainous Areas.

1.3. Areas inhabited by ethnic minority people: to be guided later by the Commission on Ethnic Minorities and Mountainous Areas.

1.4. Mountainous regions, islands and areas inhabited by ethnic minority people: Based on the development level of each region, they are classified into 3 regions (I, II and III) as defined in Decision No. 42/UB-QD of March 25, 1997 and Decision No. 21/1998/QD-UBDTMN of February 25, 1998 on the recognition of the three regions.

In case of any readjustment in geographical areas and regions, the regulations of the Commission on Ethnic Minorities and Mountainous Areas shall apply.

2. Objects:

2.1. Subjects entitled to be sold with price and/or freight-subsidized commodities: people (including State officials and employees, officers and soldiers of the armed forces) living and working in the geographical areas defined in Item I.1 of this Circular.

2.2. Subjects enjoying the policy of freight subsidy in the sale of products: Traders conducting trade activities in areas defined in Item I.1 of this Circular, selling products (on the list of products defined by the Prime Minister) turned out by people in such areas.

2.3. Traders: All business subjects (individuals or legal entities), regardless of their economic sectors (the State economic sector, the cooperative economic sector, the State-capitalist sector, foreign-invested enterprise operating under the Law on Foreign Investment in Vietnam, individual economic sector, private capitalist sector), that have business registration, conduct one or many trading acts such as purchase and/or sale of goods, provision of trading services and/or trade promotion activities on markets in the mountain regions, islands and/or areas inhabited by ethnic minority people for benefits, are all traders subject to the regulation of Decree No. 20/1998/ND-CP.

The following commercial activities by traders are also subject to the regulation of Decree No. 20/1998/ND-CP:

- Traders having head-offices and business registration not in mountainous regions, islands and/or areas inhabited by ethnic minority people but conducting trade activities in either of the regions (I, II, III) in mountain areas, islands and/or areas inhabited by ethnic minority people.

- Traders having their head-offices and business registration in either of the regions (I, II, III) but conducting trade activities in other mountainous regions, islands or areas inhabited by ethnic minority people.

Traders shall enjoy preferential policies when having vouchers or invoices, accounting books clearly showing the business results in each region and already registered with concerned bodies (tax, banking, land administration...).

II. BUILDING MARKETS, STATE STORES OR TRADE SERVICE COOPERATIVES AT CENTERS OF COMMUNE CLUSTERS OF EACH REGION

1. For region III: Markets and stores or trade service cooperatives are included in the programs for building centers of mountainous and/or highland commune clusters under Decision No. 35/TTg of January 13, 1997 of the Prime Minister, the order, procedures and capital sources for construction thereof shall be as follows:

- The main source of investment capital come from the State budget (the central budget, the local budgets and financial assistance of international organizations); besides, organizations and individuals shall be encouraged to voluntarily invest capital in production and business, expand goods exchanges and mobilize obligatory public labor in accordance with the provisions of law.

- The provincial Trade Services shall base themselves on the planning for the construction of centers of commune clusters in region III (the particularly difficult mountainous regions, islands and ethnic minority areas) to coordinate with concerned Services and Departments in drawing up annual plans to be submitted to the provincial Planning and Investment Services for sum-up and submission to the provincial People's Committees.

- When each project for the construction of a commune cluster's center is included in the investment plan, the project owner shall have to give priority to the arrangement of investment capital for the building of the market, State stores or trade service cooperatives right in the first phase of the project, and inform the provincial Trade Service and concerned departments and branches thereof for coordinated organization of implementation.

2. For region II: As the markets and stores or trade service cooperatives have not yet been included in the programs for the construction of centers of commune clusters under Decision No. 35/TTg of January 13, 1997 of the Prime Minster, the presidents of the provincial People's Committees shall consider the following conditions to decide the investment with the local budgets in the construction thereof on appropriate scale:

- The market and stores must be included in their respective province's overall planning diagram on the construction of the centers of the commune clusters, which was already approved.

- Having urgent need to build the market in order to stabilize the life, promote the economic restructure of subregions, develop the commodity production in order to boost the goods exchanges and cultural activities of the people of communes within the subregions and between the subregions and other regions.

The provincial Trade Service shall base itself on the actual situation to coordinate with concerned branches in drawing up the annual plan to be reported to the provincial People's Committee for approving the investment capital. Basing himself/herself on the approved plan, the president of such People's Committee shall decide the investment in the construction of the market, State store(s) or trade service cooperatives.

3. For region I: Markets and stores in towns, provincial capitals, district townships and areas with interprovincial and/or interdistrict communication axis: As in these areas, traffic is fairly convenient and the socio-economic development has reached certain level, the sources of investment capital for the construction thereof shall be mobilized according to the guiding principle "joint efforts by the State and traders":

- The State shall render partial support in budget for investment in the construction of market infrastructure such as ground leveling, power supply, water supply and drainage, sanitation facilities...

- Traders shall contribute capital for the construction of kiosks, pavilions, goods stalls, market structures, and shall be entitled to use market spaces according to capital contributing contracts between traders and the market management body.

- Mobilizing capital from medium- and long-term credit sources at preferential interest rates (including the National Investment Support Fund).

- Encouraging investment in the form of build-operate-transfer (B.O.T) according to Circular No. 12/BKH-QLKT of August 27, 1997 of the Ministry of Planning and Investment.

The provincial Trade Service shall base itself on the market development planning to draw up plan for the development of each type of market in this area, then submit it to the provincial People's Committee for consideration and decision.

4. The provincial Trade Service shall perform the function of specialized management over the operation of the market according to Circular No. 15/TM-CSTNTN of October 16, 1996 of the Ministry of Trade. The administrative management of the market shall comply with the regulations on market management assignment defined in Section II of Circular No. 15/TM-CSTNTN of October 16, 1996 of the Ministry of Trade.

III. PRICE AND/OR FREIGHT SUBSIDY FOR THE SALE OF SOCIAL POLICY COMMODITIES AND THE PURCHASE OF A NUMBER OF PRODUCTS MANUFACTURED IN MOUNTAINOUS REGIONS, ISLANDS AND/OR

AREAS INHABITED BY ETHNIC MINORITY PEOPLE

1. Subjects defined in Item I.2.1. shall be entitled to buy at commune clusters' centers (the commodities with price and/or freight subsidies brought to commune clusters' centers) or at the district centers (the commodities with freight subsidy transported to the district centers) as specified in Decree No. 20/1998/ND-CP of March 31, 1998, at prices equivalent to the sale prices of goods of the same categories at the provincial towns, of the same specifications, the same quality, giving priority to region III and region II with many difficulties.

For provinces only with mountainous communes (without any mountainous districts), the price and/or freight subsidies shall apply only to iodized salt and plant varieties; freight subsidy to kerosene for lighting, writing paper for school children, curative medicines; freight subsidy for the transport from the commune clusters' centers to the province's capital for the purchase of a number of products manufactured in such communes (according to the list specified by the Prime Minister).

2. For commodities eligible for price and/or freight subsidies for sale, the distance prescribed for freight subsidy and the principle for determining the retail prices and unit prices for price and/or freight subsidies shall comply with regulations in Articles 12, 14 and 16 of Decree No. 20/1998/ND-CP of March 31, 1998 of the Government and the Government Pricing Committee's Circular guiding the implementation of Decree No. 20/1998/ND-CP.

3. For commodities eligible for freight subsidy for the purchase of products turned out by people in mountainous regions, islands and/or ethnic minority areas: The provincial People's Committees shall direct concerned Services, Boards and branches to select, based on the principles defined in Clause 1, Article 24, Decree No. 20/1998/ND-CP of March 31, 1998 of the Government, products and send their lists to the Commission on Ethnic Minorities and Mountainous Areas and the Ministry of Trade for sum-up.

The Commission on Ethnic Minorities and Mountainous Areas shall assume the prime responsibility and coordinate with the Ministry of Trade, the Ministry of Agriculture and Rural Development and concerned ministries and branches in summing up the reports of the provincial People's Committees and submit them to the Prime Minister for deciding the list of products eligible for freight subsidy in each period.

4. Goods supply norms for calculation of price and freight subsidy funds:

4.1. Iodized salt: 5 kg/person/year

4.2. Kerosene: 3 liters/person/year

4.3. Pupils' writing paper (or notebooks): 1.5 kg/pupil/year (about 12 quires of horizontally lined paper or the corresponding number of notebooks).

4.4. Curative medicines: valued at 10,000 VND/person/year, according to specific lists prescribed by the Ministry of Health.

4.5. Fertilizers: 100 kg/hectare of arable land/year, including microbiological fertilizer produced by localities.

4.6. Insecticides: 0.12 kg/ha of arable land/year, according to the list prescribed by the Ministry of Agriculture and Rural Development.

4.7. Plant varieties: being new varieties of high yield, good quality, suited to the soil and climatic conditions, being used in areas planned for concentrated development of cash crops; (priority given to region III), including food plant varieties, industrial plant varieties (short or long-term), fruit tree varieties, medicinal herb varieties.

The price and/or freight subsidy levels for these commodities shall be calculated in rice equivalent according to the following elements:

- Areas under new varieties represents 5% of the area under rice.

- Variety norm for 1 hectare: calculated according to rice = 160 kg/ha.

- Price and/or freight subsidy for 1 kg: according to the guidance of the Government Pricing Committee.

The province's plant variety fund = (rice acreage x 5%) x (160 kg/ha x subsidized price unit and subsidized freight unit).

The provincial People's Committees shall annually base themselves on their respective localities' cultivation plant plans, allocated funds and the guidances of the Government Pricing Committee to decide the quantity of each plant variety and notify them to the Ministry of Agriculture and Rural Development when organizing the implementation.

4.8. Coal (including coal exploited from mines under the locality's management): Annually basing itself on the budget capability and proposal of each locality, the Commission on Ethnic Minorities and Mountainous Areas shall consult the concerned ministries and branches before allocating quantities and funds for localities. The presidents of the provincial People's Committees shall base themselves on the quantity and fund to decide specific use objectives (giving priority to the production of construction materials, agricultural and forest products processing, substitute for fuel used daily by people...).

4.9. Book distribution: including

- Books on social and political affairs, law, general economics.

- Books on scientific and technical popularization and knowledge improvement.

- Assorted books on traditional literatures of various nationalities of Vietnam.

- Children's books (including books supplied free of charge by the State).

- Books published in ethnic minority languages.

- Assorted cultural products in service of the spiritual life of the people in mountainous regions, islands and areas inhabited by ethnic minority people, including banners, flags, slogans, leaders' portraits, folk paintings and calendars of popular types.

Annually, the Ministry of Culture and Information shall consult the Commission on Ethnic Minorities and Mountainous Areas and the Ministry of Finance to determine the quantities of the above-mentioned publications according to the requirements of each locality and the State budget capability.

4.10. For each period, the Commission on Ethnic Minorities and Mountainous Areas, based on the people's consumption demand, the budget capability and production demand for the application of technical advances, shall consult the concerned ministries and branches before adjusting the supply norms compatible to practical situation.

5. To draw up the plan, allocate quotas and readjust fund-regulating structure.

5.1. Planning and quotas allocation.

a/ Grounds to draw up plan for price and/or freight subsidies:

- The supply norm prescribed in Item III.4 of this Circular.

- The number of people living and working in the areas defined in Item I.1 of this Circular according to the preceeding year's data announced by the General Department of Statistics (or provincial Department of Statistics) and the actual average population growth rate of the province to make calculation for the plan year.

- The arable land area, including land cultivated with rice, subsidiary food crops, short- and/or long-term industrial plants according to the prceeding year's data announced by the General/municipal Department of Statistics (or the provincial Department of Statistics) to make calculation for the plan year.

- Freight subsidies for the transport and sale of products turned out by people in mountainous regions, islands and ethnic minority areas shall be based on the list of products decided by Prime Minister, the freight subsidy level and transport distance from the centers of commune clusters to the nearest delta provincial capital or town according to the regulations in the Government Pricing Committee's Circular guiding the implementation of Decree No. 20/1998/ND-CP.

b/ To draw up plans.

- Based on the elements defined in Point a, Item 5.1 above, the provincial People's Committees shall annually direct concerned branches to draw up price and/or freight subsidy plans to be submitted to the Commission on Ethnic Minorities and Mountainous Areas, the Ministry of Planning and Investment, the Ministry of Finance and the Ministry of Trade before August 1st.

- Based on the plans of provinces, the Commission on Ethnic Minorities and Mountainous Areas shall assume the prime responsibility and coordinate with the Ministry of Trade and other ministries in determining the quantity of each goods item for each locality, serving as the basis for determining the price and/or freight subsidy fund and send it to the Ministry of Planning and Investment and the Ministry of Finance for sum-up and report to the Government which shall further submit to the National Assembly Standing Committee.

- Based on the State budget estimate reserved by the Government for price and/or freight subsidies, the determined quantities of commodities and the subsidized price/freight units prescribed by the Government Pricing Committee, the Commission on Ethnic Minorities and Mountainous Areas shall consult the Ministry of Finance and concerned ministries and branches before allocating price and/or freight subsidy fund for each goods item and each province (with priority being given first to localities confronting numerous difficulties).

- The Ministry of Planning and Investment shall inform the localities and ministries (if any) of the quotas on quantity and the price/freight subsidy funds before December 31. The Ministry of Finance shall allocate funds in the form of "authorized fund" according to the implementation timetable.

5.2. Fund allocation:

a/ For iodized salt: To be included into the national program against iodide deficiency-related disorders, the Ministry of Health shall assume the prime responsibility and coordinate with the Ministry of Finance and concerned ministries in allocating fund and quantity for each province.

The iodized salt price/freight subsidy fund shall be assigned to the national program against iodide deficiency-related disorders and implemented as follows:

- For the quantity of iodized salt produced by localities for their own consumption, the price subsidy (payment for the mixture of salt with iodide, plastic bags) and freight subsidy for the transport of common salt from the purchase location (as prescribed by the Ministry of Trade and the Government Pricing Committee) to the iodized salt plants and of iodized salt from the production place to commune clusters shall be allocated directly to the provincial People's Committees in the form of authorized fund.

- For the quantity of iodized salt provided by centrally-run enterprises to localities for sale to people therein, the freight subsidy fund for the transport from the district centers to the commune clusters' centers shall be allocated directly to the provincial People's Committees in the form of authorized fund; the fund for mixing iodide with salt (the payment for the mixture, small plastic bags for containing iodized salt) and the freight subsidy fund for the transport to the district centers shall be allocated directly to the centrally-run enterprises that perform such work.

b/ Such commodities as kerosene, schoolchildren's writing paper, books on distribution, medicines, fertilizers, insecticides, plant varieties, coal; and the freight subsidy fund for the sale of agricultural and forest products shall be allocated directly to the provincial People's Committees in the form of authorized fund.

5.3. Reajusting price/freight subsidy structure and regulating subsidy funds

a/ Based on the total quantities of commodities and the price/freight subsidy funds therefor, the provincial People's Committees shall draw up implementation plan for each commodity including its quantity, corresponding fund and implementation timetable. First of all, adequate price/freight subsidy fund must be ensured for such commodities as idiodized salt, schoolchildren's writing paper, books, medicines with prescribed quantities; the remaining fund can be regulated among commodities or regions (I, II, III) suitable to the practical conditions in the locality.

Based on the above plan, the provincial People's Committees shall draw up the plan to divide the price/freight subsidy fund for each quarter, then report it to the Commission on Ethnic Minorities and Mountainous Areas and the Ministry of Finance for supervision and allocation.

b/ For particularly difficult areas (Region III) where people cannot afford the commodities, the presidents of the provincial People's Committees shall base themselves on their price/freight subsidy funds allocated for the year and their respective provincial budget sources to consider and decide the free-of-charge supply of one or several goods items such as iodized salts, medicines, schoolchildren's writing paper to people according to the following principle:

- Subjects eligible for free supply: Only hungry households or very poor households in region III, which actually cannot afford such commodities and are selected and proposed by the commune People's Committees, shall be considered for free supply (not all households in the commune), with attention being paid to households enjoying preferential social policies in the region.

- To ensure unity among ethnicities, stabilize the people's life, boost production and ensure good relationships between the households supplied with goods and other households in hamlets, between adjacent hamlets as well as between regions in order to create an atmosphere of elation and unity.

- The prime cost of goods supplied free of charge must not be higher than the retail price of the goods of the same categories, which enjoy price/freight subsidies in the locality at the same point of time.

- In areas considered for free supply, the provincial People's Committees shall give priority to incorporating them into various socio-economic development projects (for hunger elimination and poverty alleviation, afforestation...) in order to gradually guide people to develop economy and help them to be capable, within a period of 1 or 2 years, of buying such commodities by themselves.

6. Determining enterprises for carrying out the purchase and/or sale of commodities with price and/or freight subsidies: In order to overcome the present state of scatteredness and to ensure the compatibility with the purchasing power and market capacity as well as business scale in the localities (districts, commune clusters' centers), the provincial People's Committee shall base itself on the characteristics of each area to decide either to apply the form of bidding or to select enterprise(s) qualified in term of distribution network, material facilities, personnel... for the assignment of the task of buying and selling goods items with price and/or freight subsidies (excluding medicines) to facilitate the people's purchase and sale of goods with reasonable prices and good quality in order to control and save the circulation costs.

IV. STATE ENTERPRISES CONDUCTING TRADE ACTIVITIES IN MOUNTAINOUS REGIONS, ISLANDS AND AREAS INHABITED BY ETHNIC MINORITY PEOPLE

1. Expanding the State-run trade networks in mountainous regions, islands and ethnic minority areas to enable them to play the leading role and control the market for the sale of social policy commodities or supplies in service of production and the purchase of a number of important products manufactured by people, particularly in highland, deep-lying and remote areas and particularly difficult ethnic minority areas.

The State-run trade service shall have to expand its store network to commune clusters' centers so as to organize appropriate form to select and use trade service cooperatives, State economic organizations (enterprises, agricultural or forestrial farms...), schools, health stations, teachers and prestigious people in hamlets, forming networks within the commune clusters and between commune clusters and other regions.

Through goods sale-purchase agency or entrustment activities, commercial advertisement, trade exhibition... to establish cooperative ties among State enterprises (under the central or local government and in the same areas), among economic sectors in the spirit of mutual benefit with a view to creating a system of smooth circulation channels from production to consumption as well as between the mountainous and delta regions.

The provincial Trade Services shall assume the prime responsibility and coordinate with the provincial Planning and Investment Services as well as concerned branches in the provinces in planning the development of trade activity networks (including markets, State stores, trade service cooperatives, non-State trade organizations...) suitable to the socio-economic conditions in the locality and associating trade activities with population and production zone planning, gradually covering all "white" (non-trade network) areas with trade networks. Based on the planning, annually, the provincial Trade Services shall draw up plans and submit them to the provincial People's Committees for consideration and decision.

The Ministry of Trade shall, together with the Ministry of Planning and Investment, coordinate with concerned ministries and branches and localities in organizing surveys and reviewing models of enterprise conducting trade activities in mountainous regions, islands and ethnic minority areas (district companies, provincial companies, district stores, regional companies...), guiding localities to reorganize State trade enterprises in the areas.

2. The State-run trade enterprises engaged in public-utility activities shall be determined in accordance with the provisions in Clause 2, Article 2 of Decree No. 56/CP of October 12, 1996 of the Government on the State enterprises engaged in public-utility activities and the implementation guidance in Circular No. 1-BKH/DN of January 29, 1997 of the Ministry of Planning and Investment, and Circular No. 6-TC/TCDN of February 24, 1997 of the Ministry of Finance.

The State enterprises engaged in trade activities in mountainous regions, islands and ethnic minority areas, which meet all the following conditions, may be turned into public-utility enterprises in the field of trade if they wish so:

- Operating mainly in region III in the mountainous areas, islands or ethnic minority areas.

- Having at least 70% of their turnover generated from the production or sale of goods items, consumption of products made in mountainous regions, islands and/or ethnic minority areas according to the State's price and/or freight subsidy policy.

The provincial Trade Services shall assume the prime responsibility and coordinate with the provincial Planning and Investment Services in considering qualified enterprises and drawing up plans to be submitted to the provincial People's Committees for decision according to the order and procedures for setting up public-utility enterprises.

3. The working capital of the State-owned trade enterprises in the mountainous regions, islands and ethnic minority areas.

3.1. The provincial Trade Services shall assume the prime responsibility and coordinate with the Department for Management of State Capital and Property at Enterprises (hereafter abbreviated as DMSCPE) and the provincial Finance Services in guiding the enterprises having their head offices and business registration in the locality to determine the amount of working capital being in use, including capital allocated from the State budget, capital originating from the State budget (self-supplementing capital), capital borrowed from banks and capital contributed by workers and employees in the enterprises (if any) which shall serve as basis for finding measures for settlement.

3.2. The reasonable demand for working capital of the State-owned trade enterprises in mountainous regions, islands and ethnic minority areas shall be determined on the basis of:

- The production and business tasks assigned to the enterprises as stated in the decisions on their establishment, as expressed through their business results (turnover) in the latest 2 to 3 years.

- The amounts of working capital (including self-acquired capital and borrowed capital) actually used by the enterprises in the 2-3 latest years.

- Such specific business conditions as roads and transport distance, the climatic impacts on the circulation process, the seasonal characters of production and consumption, payment service conditions and credits of banks, the people's production and consumption practices and requirements and other factors which affect the speed of working capital rotation.

- The demand for the reserve of essential commodities, particularly those under the social policies, according to the quotas defined in Item V.2 of this Circular.

The State-run trade enterprises shall draw up plans on reasonable demand for working capital, report them to the provincial Trade Services, the DMSCPE and the provincial Finance Services.

3.3. Based on the plans reported by enterprises, the provincial Trade Services shall assume the prime responsibility and coordinate with the DMSCPE and the provincial Finance Services in evaluating the reasonable working capital demands and report them to the Ministry of Finance, the Ministry of Trade and the provincial People's Committee for considering the additional allocation from the central budget in the form of allocating authorized fund to spend on "development investment" (Point b, Clause 2, Article 31 of the Law on State Budget), ensuring 50% of the enterprise's reasonable demand for working capital.

Annually, when making the budget estimates, the provincial Finance Services shall base themselves on the capability of the local budget revenue sources (including the source of additional allocation from the central budget) and the situation on the enterprise's working capital to arrange the expense for "the capital support for State enterprises", submit them to the provincial People's Committees and report to the Ministry of Finance.

3.4. Based on the reasonable demand for working capital of the State-run trade enterprises operating in mountainous regions, islands and ethnic minority areas reported by the provincial People's Committees, the Ministry of Finance shall coordinate with the Ministry of Trade in making a sum-up and report it to the Prime Minister for supplementing the expenditure on "the capital support for State enterprises conducting trade activities in mountainous regions, islands and ethnic minority areas" from the central budget. When obtaining the Prime Minister's approval, the Ministry of Finance shall inform it to the provincial People's Committees for implementation in the form of allocation of "authorized fund".

V. MANAGEMENT OF RESERVE CAPITAL FOR POLICY COMMODITIES IN MOUNTAINOUS REGIONS, ISLANDS AND ETHNIC MINORITY AREAS

1. Price and/or freight subsidized commodities for sale in the mountainous regions, islands and ethnic minority areas, which shall be supplied with reserve capital, include:

(1) Salt: including common salt (for mixing with iodide) and iodized salts.

(2) Kerosene for lighting.

(3) Schoolchildren's writing paper.

(4) Medicines (the lists thereof specified by the Health Ministry.)

Depending on the specific conditions of each locality, the provincial People's Committee may add the commodities which must be necessarily reserved in particularly difficult areas (region III).

2. The State-run trade enterprises performing the task of supplying policy commodities defined in Point 1 shall be provided with adequate reserve capital from the local budget. The capital supply level (after subtracting the working capital amount already additionally allocated) shall be determined on the basis of the demand for the reserve of policy commodities, corresponding to the demand for consumption of such commodities by the people in the localities where they serve for an average period of from 2 to 3 months. Depending on the situation of each region, the provincial People's Committee shall determine the reserve duration suitable to the local reality.

3. Enterprises supplied with capital shall have to use it for the circulation reserve of policy commodities. The circulation reserve must be organized in a way to meet the requirement of each commodity type, each locality and each period of time. Enterprises shall be entitled to take initiative in organizing the circulation reserve suitable to the specific conditions of each region (I, II, III) and the characteristics of commodities as well as consumption demand.

At such points of time as flood season, new year festivals, rituals and in localities very difficult to access, when and where the required quantity of reserve commodities must be greater than the average reserve level, enterprises shall have to mobilize other sources of capital (credit capital or their own working capital) for the reserve. Besides the above-mentioned points of time and localities, enterprises shall be entitled to temporarily use part of the reserve capital for trading in other commodities and have to reimburse it in time for the reserve of policy commodities, thus ensuring the adequate supply of goods for the people.

4. The provincial People's Committees shall specify the goods quantity and corresponding capital for the reserve of each kind of commodity, each region (I, II, III), the reserve time and the mobilization of the policy commodity reserve capital for business requirements at appropriate time.

5. The enterprises shall be exempt from the capital use fees with regard to the reserve capital for policy commodities in the mountainous regions.

6. The policy commodity reserve capital shall be managed as is the working capital and be preserved in accordance with the Regulation on the financial management and business accounting by State enterprises, which was promulgated together with the Government's Decree No. 59-CP of October 3, 1996 and Circular No. 75/TC-TCDN of November 12, 1996 of the Ministry of Finance guiding the implementation thereof.

Once every six months, the enterprises provided with reserve capital shall have to report to the DMSCPE and the provincial Trade Services on the situation of using the policy commodity reserve capital. The DMSCPE shall sum up the situation and report it to the provincial People's Committees and the Ministry of Finance.

VI. IMPLEMENTATION ORGANIZATION

1. The Commission on Ethnic Minorities and Mountainous Areas shall organize the coordination between concerned ministries as well as branches and the provincial People's Committees in implementing the price and/or freight subsidy policy and annually reporting the results thereof to the Prime Minister. It shall monitor, guide, inspect and supervise the implementation of the price and/or freight subsidy policy by localities, ministries, branches and fund-using enterprises; detect in time and handle problems and propose to the Government necessary measures to ensure that the policy is implemented in accordance with the set objectives and prescribed management regime; promote the policy's effects in stabilizing the people's life and local market, promote the economic restructure and develop the commodity production.

2. The Ministry of Planning and Investment and the Ministry of Finance shall deduct from the central budget in the annual plan the price and/or freight subsidy funds according to objectives of Decree No. 20/1998/ND-CP of March 31, 1998 of the Government and the expenditure on "capital support for State enterprises engaged in trade activities in mountainous regions, islands and ethnic minority areas", and submit them to the Government for approval. Basing themselves on the quotas already approved by the Government and the implementation plans of the Commission on Ethnic Minorities and Mountainous Areas as well as ministries and branches (after agreement is reached), they shall inform and guide the provincial People's Committees to organize the implementation thereof; coordinate with the Commission on Ethnic Minorities and Mountainous Areas, concerned ministries and branches and provincial People's Committees in monitoring, inspecting and supervising the implementation of the policy for trade development in mountainous regions, islands and ethnic minority areas in accordance with the set objectives and current management regimes.

3. The Ministry of Trade shall guide localities to mobilize various economic sectors to participate in trade activities in order to expand the markets, and promote goods exchange between regions; ensure that people in localities can buy essential commodities for their production and life and sell their products more conveniently without having to travel a too long way and to buy goods at the prices too higher than those in delta regions; coordinate with the Commission on Ethnic Minorities and Mountainous Areas, concerned ministries, branches and the provincial People's Committees in monitoring and settling difficulties and problems in the implementation of the price/freight subsidy policy and policies towards traders operating in these regions.

4. The provincial People's Committees shall have to direct, organize and inspect periodically or irregularly the implementation of the policy for trade development in the mountainous regions, islands and ethnic minority areas; ensure that people living and working in their respective localities can actually benefit from the outcomes of the policy and promote the socio-economic development; detect and handle in time difficulties and problems arising in the course of implementation organization and propose to the Government and concerned ministries or branches the handling measures.

5. This Circular takes effect according to the effect of Decree No. 20/1998/ND-CP of March 31, 1998. Particularly Item III.4 and III.5.2 of this Circular shall take effect from January 1, 1999. All the joint circulars or separate circulars of the Ministry of Trade, the Ministry of Finance, the Ministry of Planning and Investment and the Commission on Ethnic Minorities and Mountainous Areas, which are contrary to this Circular, are annulled.

The ministries, branches, the provincial People's Committees and concerned enterprises are requested to report in time any problems arising in the course of implementation to the ministries that have jointly issued this Circular for study and additional guidances.

For the Minister-Chairman

of the Commission on Ethnic Minorities

and Mountainous Areas

Vice Chairman

NGUYEN THAC GIAP

For the Minister of Trade

Vice Minister

HO HUAN NGHIEM

For the Minister of Planning and Investment

Vice Minister

LAI QUANG THUC

For the Minister of Finance

Vice Minister

TRAN VAN TA